In In re. Eckstein Marine Service, the claimant, Lorne Jackson, was injured when he was entangled in a line and pulled into a mooring bit, seriously injuring his leg, on February 28, 2009.  He filed suit on April 28, 2009 in Texas state court, which Eckstein (now known as Marquette) answered on June 10.

Evidently catching Eckstein by surprise, Mr. Jackson made demand for $3,000,000 on December 2, 2009.  Then, on January 18, 2010, Eckstein filed a petition for exoneration or limitation of liability in the Southern District of Texas, with the value of the vessel at $750,000.  Mr. Jackson moved to dismiss the limitation as untimely because it was filed eight months after he filed his complaint.  The district court (Judge Lee Rosenthal) granted Mr. Jackson’s motion, finding that the federal court lacks jurisdiction if the petitioner does not seek limitation within six months written notice of a claim.  For the six month clock to start running, the vessel owner must have “a reasonable possibility” that the claimant(s) claims will exceed the value of the vessel.  .

On appeal, Eckstein argued it did not know with a reasonable possibility that Mr. Jackson’s claim could exceed the value of the vessel until it received Mr. Jackson’s December 2, 2009 settlement demand for $3,000, but the Fifth Circuit affirmed Judge Rosenthal, finding that Mr. Jackson’s state court complaint “established a reasonable possibility that his claim might exceed $750,000, the value of the M/V St. Andrew.”  Mr. Jackson alleged permanent and catastrophic injuries and the Fifth Circuit noted the standard is fairly lax.  “Once a reasonable possibility has been raised,” the Court ruled, “it becomes the vessel owner’s responsibility to initiate a prompt investigation and determine whether to file a limitation action.”

The Court’s ruling does not mean service of a lawsuit triggers the six-month clock for filing limitation, but after the court’s ruling, at the very least, receipt of a lawsuit should trigger vessel owners’ long, hard look as to whether to file limitation.

Author:  Harry Morse